Hybrid Trust Vs "Property Investors Trust"

E

Ebbie

After reading Michael Yardney's latest e-newsletter today I am very interested to hear more about "Property Investors Trust's" as referred to in the Ed Chan article. He made the comment "...a Hybrid Trust is unusable for properties in NSW as they lose their land tax threshold", giving the impression that his own trade-marked trust would allow this.

I am using Hybrid Trusts in NSW and know first hand of the extra costs incurred by land tax! Has anyone used an Ed Chan "Property Investors Trust" and if so can you please give me a run down on the differences (advantages/disadvantages) between this type of trust and a Hybrid Trust supplied by NickM and DaleGG.

Thanks.
 
Hiya

Why dont you give Ed's group a call ?

While you are at it you could ask them if they still feel comfy with HDT income unit holders to have the loan in the corporate trustee name.

ta

rolf
 
I posed a question to the group and the response from memory was to drop in for a consult..at a fee (about $220-250)

But I've been led to believe it may be a unit trust with its units being owned by another hybrid trust, so as to minimise land tax in NSW as well as achieving asset protection.

However, I must admitt that I know "didly" about the structure.

They have patented the structure and not much appears to be known about it.

Pro's and Con's..Dunno??


REDWING
 
Redwing,

If this Property Investors Trust is "a unit trust with its units being owned by another hybrid trust, so as to minimise land tax in NSW as well as achieving asset protection", this sounds similar to what Chris Batten advocates, on his website www.chrisbatten.com.au. I don't know any details about the property investors trust as yet.

GSJ
 
Top Secret

Hmm...does anyone know more about this Property Investors Trust yet, or is it still top secret?

GSJ
 
ssshhhhhhhhhhhhh...:rolleyes:

Sorry, no idea, they do about 40-50 trusts a month though I believe; is anyone using this set up?
 
redwing said:
ssshhhhhhhhhhhhh...:rolleyes:

Sorry, no idea, they do about 40-50 trusts a month though I believe; is anyone using this set up?
Click to expand...
I didn't take Rolfs advice so I haven't given them a call yet (I'm not keen on a $250 consultancy fee right now). At 40 or 50 trusts a month you'd think there would be at least one forumite who might be willing to give us some more info. They probably all signed the Secrecy Act. :confused:
 
The real test is to see if these trusts have held up in court or against the ATO, rather than 'yeah I had a trust set up by Ed and it's all fine so far'...

Hell, I can claim a $10k trip to Hawaii as a tax deduction if I wanted to but it'll get shot down in pieces in an audit.
 
domcc1 said:
The real test is to see if these trusts have held up in court or against the ATO, rather than 'yeah I had a trust set up by Ed and it's all fine so far'...

Hell, I can claim a $10k trip to Hawaii as a tax deduction if I wanted to but it'll get shot down in pieces in an audit.
Click to expand...

I've spoken to Ed about this question and the answer is no it has not been tested in court (but I would think this would not be a common occurrence.)

He did tell me that it had been checked out by and given the OK by very senior QC's

While on the topic of trusts, in this month's e-magazine there is an exerpt from Dale Gatherum-Goss's tax battles manual.

If you haven't got yours yet or don't subscribe go to www.propertyupdate.com.au
 
Hiya

I dont have a problem with a 250 an hour consult fee, indeed, generally free high level legal or accountancy advice is worth exactly that -ZIP.

Most Ips, are at least 250 k so on a single IP an hours advice is .1 % of the purchase price.

I can tell you that the last business finance I did for a major foodie fran, the pre commit consult fees were closer to 1.5 %.

While I can see that some people only want a bit of info, and I dont agree with per se or endorse Ed's product or advice, 250 is a nice entry level fee that keeps the tyre kickers at bay - after all, no sale, no eat.

ta

rolf
 
Thanks Ruby I will look into attending.

Rolf I agree it is worth paying for the right advice and have done so in the past. I'm not keen on paying a $250 consultancy fee right now without first knowing a bit more about Ed Chan and his Property Investors Trust.

I'd like to know a trust that doesn't pay land tax isn't some sort of gimmick before I spend the time/money attending his office which is where this forum comes in useful. If someone with one of these Property Investors Trusts were to confrim it is a superior structure to other trusts (in particular hybrid trusts) I would happily spend more than $250 looking into it - considering the many thousands of dollars it might save in land tax!
 
The P.I.T.

For what it's worth, here's an initial "Pros and Cons" list for the Property Investor's Trust (The P.I.T.), based on the limited information available so far, ie. the 2 or so articles/posts seen on forums.

The Pros:

1. For NSW properties you can retain the land tax threshold.
2. Can divert rental income to spouse on lower tax rate and thereby increasing negative gearing benefits to other higher tax rate partner, before property becomes positively geared on its own accord.

The Cons:

1. If you have multiple properties the you will have to pay land tax anyway.
2. If your spouse is also a high income earner, this limits the benefits of diverting rental income to him/her.
3. Specialised and trademarked structure mainly for property: un-tested in courts or against the ATO, other professionals, eg, accountants, solicitors, conveyancers, banks, mortgage brokers will not know or understand anything about it now, so you may have to rely mainly on Chan-and-Naylor and other associates to fully utilise this structure, and pay the fees they set, with limited alternatives.
4. Changing from an existing trust structure, such as a Discretionary Trust or Hybrid Discretionary Trust, may be costly and not worth the benefits. The ongoing costs may also me more expensive.

The only other thing I know from speaking to one of the partners at the company, is that the trust is some variant of a Unit Trust plus Hybrid Discretionary Trust structure.

I wonder whether in this trust, properties are able to be transferred to a self-managed superannuation fund in the future, as per Chris Batten's advocated structure?

I also wonder if there is any comprimise with respect to asset protection by using this structure?

Hmm...that's about all I can come up with right now..."Cons" are winning at this stage!

GSJ
 
Last edited:
Thanks for the summary GSJ.

GSJ said:
1. If you have multiple properties the you will have to pay land tax anyway.
Click to expand...
Multiple properties in the one trust or multiple properties regardless of how many trusts they are held in? I don't expect you would get a land tax free threshold for each trust so if you already had properties in other trusts or in your own name (beyond the threshold) there would be no land tax benefit to a P.I.T???
 
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